Personal Wealth Management / Economics

Too Busy Working

United States unemployment stands today at a 5-year low of 4.

United States unemployment stands today at a 5-year low of 4.4%, and revisions are trending upward. Maybe you missed this news last week. It seems as if most people didโ€”probably because they were all too busy working.

There are two widely analyzed reports on the employment situation in the US:

  • Establishment Survey: a heavily weighted index toward government entities (representing only 17% of the economy) and does not accurately capture employment changes within small and medium sized corporations (representing more than 50% of all employees in the US). Additionally, only 60% of the establishment survey is completed by the first release โ€“ leaving the results open for huge subsequent revisions.
  • Household Survey: This survey reported a gain of over 437,000 jobs in the most recent announcement. We prefer this one because it's more comprehensive and a better reflection of employment in total.

While we believe the Household survey is better, neither is particularly accurate because they don't adequately account for a significant part of the economy: the self-employed and other very small businesses. Millions of citizens make their living or generate extra income through things not found in employment statistics at all.

The misconstrued employment situation underscores a point we often make: most economic data is suspect at best because the surveys aren't versatile or comprehensive enough to keep up with a dynamic, market-based economy.

And we don't buy the false argument that new jobs aren't of a "high" quality. Thomas Sowell (a senior Fellow of the Hoover Institute at Stanford) often puts it this way: almost any kind of job creation is good job creation because it means people are entering the workforce. And people generally enter the workforce at low levels; they don't start out as CEOs. They start out as clerks and waitersโ€”the low person on the hierarchy. As they get older and gain experience and education, they move up. Today's laborer is tomorrow's middle manager; and today's middle manager is tomorrow's executive.

With any luck, our commentary will fall on deaf earsโ€ฆeverybody will be too busy working to worry about employment.


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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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